Goodman Group · ASX:GMG
Goodman — H1 FY2016 Earnings Presentation
53 slides from Goodman's earnings presentation, Feb 11, 2016
Slide 1: Results for the half year ended 31 December 2015
Results for the half year ended 31 December 2015 11 February 2016 For personal use only Insert Cover page Millennium Centre, New Zealand
Slide 2: Important notice and disclaimer
Important notice and disclaimer For personal use only + This document has been prepared by Goodman Group (Goodman Limited (ABN 69 000 123 071), Goodman Funds Management Limited (ABN 48 067 796 641; AFSL Number 223621) as the Responsible Entity for Goodman Industrial Trust (ARSN 091 213 839) and Good
Slide 3: Contents
Contents For personal use only + Section 1 Highlights + Section 2 Results overview + Section 3 Operational performance + Section 4 Outlook and summary + Appendices - Results analysis - Investment - Development - Management - Capital management 3
Slide 4: Section 1 Highlights
For personal use only Section1+1+ Section Highlights Highlights Goodman Interlink, Hong Kong Erfurt, Zalando, Germany
Slide 5: Highlights
Highlights For personal use only + Focused strategy driving consistent and sustainable growth – Operating profit1 of $357 million, up 9% on 1H FY15 – Operating EPS1 of 20.1 cents2, up 7.5% on 1H FY15 – Distribution per security of 11.9 cents, up 7% on 1H FY15 – Statutory accounting profit of $919 mi
Slide 6: Highlights
Highlights For personal use only + Asset sales of $1.3 billion across the Group and managed Partnerships have reduced new capital needs + High occupancy maintained at 96% with a retention rate of 74% and WALE of 4.7 years Own + Like for like rental growth at 1.7% and positive lease reversions of 5.2
Slide 7: Section 2 Results overview
For personal use only Section Section2+2+ Results Results Overview overview Stockyards Industrial Estate, Australia M7 Business Hub, Australia
Slide 8: Results overview
Results overview For personal use only + Outperformance to continue into the second half 1H FY16 – Driven by global development and management contributions – Benefiting from global platform with offshore earnings contributing 63% Operating profit ($m) 356.6 of operating EBIT Statutory accounting pr
Slide 9: Profit and loss
Profit and loss For personal use only + Half year statutory profit of $919 million, includes property Income statement valuations derivative mark-to-markets and other non-cash or 1H FY15 1H FY16 non-recurring items $M $M Investment (look through)¹ 248.8 260.9 – Cap rate compression and revaluations
Slide 10: Balance sheet
Balance sheet For personal use only + Strong balance sheet maintained Balance sheet – Financial leverage reduced given earnings composition 30 June 2015 31 Dec 2015 $m $m – Continued 60% payout ratio of operating EPS Stabilised investment properties 2,710 3,031 – Self funding business over the long
Slide 11: Group liquidity position
Group liquidity position For personal use only + Capital structure and hedge strategies have enabled the Goodman Group debt maturity profile¹ Group to withstand foreign currency volatility + Goodman Group has cash and available lines of credit of $1,887 million as at 31 December 2015 – $845 million
Slide 12: Section 3 Operational Performance
For personal use only Section 3+ Operational Performance Interlink, Berlin Goodman Fiege Brieseleang, Hong Kong Osaka Nanko, Japan
Slide 13: Investment
Investment For personal use only + Property fundamentals remain robust reflecting quality of the Investment ($m) 1H FY15 1H FY16 portfolio and customers: Direct 74.7 69.6 – Maintained occupancy at 96% Cornerstones 174.1 191.3 – Retention remains high at 74% and a WALE of 4.7 years Look through EBITD
Slide 14: Development
Development For personal use only + Development WIP at $3.4 billion Development ($M) 1H FY15 1H FY16 – Europe and North America are the key contributors to Revenue 157.8 218.0 increased revenue EBITDA 127.3 177.2 + Development revenue from WIP increasing to 13% – Driven by strong margins from fallin
Slide 15: Management
Management For personal use only + Strong management returns driven by: Management ($M) 1H FY15 1H FY16 – Increasing asset values growing management earnings Management income² 105.0 147.2 – Transactional activity levels a recurring theme and includes EBITDA 59.7 99.3 performance fees + Average FX m
Slide 16: Management – AUM
Management – AUM For personal use only + Major achievements during the half year include: Third party AUM by region – Commitment of a further US$1.25 billion and acquisition of nine projects by GCLP – GCLP develop to hold strategy in line with capital partner’s objectives as the Partnership matures
Slide 17: Management platform
Management platform For personal use only GAIP GHKLP GEP GAP GCLP GMT1 GJCP2 ABPP Total assets $6.6bn $4.6bn $3.9bn $3.7bn $2.6bn $2.1bn $1.6bn $1.2bn GMG co-investment 27.5% 20.0% 20.4% 19.9% 20.0% 20.6%3 20.0%3 43.1% GMG co-investment $1.2bn $0.7bn $0.4bn $0.5bn $0.4bn $0.3bn3 $0.2bn3 $0.3bn Numbe
Slide 18: Section 4 Outlook and Summary
For personal use only Section 3+ Section 4+ Capital Management Outlook and Initiatives Summary Pudong International Airport Logistics Park, China Pudong International Airport Logistics Park, China
Slide 19: Strategy and outlook
Strategy and outlook For personal use only + Australian listed, leading global industrial property operator and investment manager + Global platform in gateway cities generating long term returns + Capital partnering approach focused on long term returns, performance and return on equity + Customer
Slide 20: Appendix 1 Results analysis
For personal use only Appendix 1+ Results analysis Westney Pinnacle Industry Corporate Park, Park, New Zealand Australia Banfield Distribution Centre, Australia Kobe, Japan
Slide 21: Profit and loss
Profit and loss For personal use only Total income by business segment for the half year ended 31 December 2015 Category Total Investment Management Development Unallocated Non- operating items $M $M $M $M $M $M Gross property income 108.7 100.4 - - - 8.3 Management income 147.0 - 147.0 - - - Develo
Slide 22: Profit and loss (cont)
Profit and loss (cont) For personal use only Category Total Investment Management Development Unallocated Non-operating items $M $M $M $M $M $M EBIT – per statutory accounts 1,057.3 205.9 99.3 177.2 (30.1) 605.0 Net gain from fair value adjustments on investment properties (253.6) - - - - (253.6) Sh
Slide 23: Reconciliation of non-operating items
Reconciliation of non-operating items For personal use only Non-operating items in statutory profit & loss Half Year ended 31 Dec 2015 $M $M Property valuations Net gain from fair value adjustments on investment properties 253.6 Share of net gain from fair value adjustments on investment properties
Slide 24: Financial position
Financial position For personal use only As at 31 December 2015 Direct Assets Investments Developments Other Total $M $M $M $M $M Capital allocation Cash - - 844.7 844.7 Receivables - - 283.4 179.9 463.3 Inventories - - 1,235.9 - 1,235.9 Investment properties 3,030.7 - 177.6 - 3,208.3 Investments ac
Slide 25: Net tangible asset bridge
Net tangible asset bridge For personal use only + For period ended 31 December 2015¹ 1. Calculated on 1,770.1 million securities being closing securities on issue and excludes minority interest 25
Slide 26: Property valuations
Property valuations For personal use only + The six months to December 2015 has seen the industrial market continue to strengthen, with transactions across all regions setting new benchmark yields + The weighted average cap rate for the Group compressed by 40 bps over the period to 6.6% + Strong gai
Slide 27: Appendix 2 Investment
For personal use only Appendix 2+ Investment Goodman Interlink, Hong Kong
Slide 28: Leasing
Leasing For personal use only Across the Group and managed Partnerships platform: + 1.5 million sqm leased during the half year + Positive lease reversions of 5.2% annually on new leasing deals, with like for like NPI growing at 1.7% + Occupancy maintained at 96% Region Leasing area (sqm) Net annual
Slide 29: Customers
Customers For personal use only Top 20 global customers (by net income – look through basis) 29
Slide 30: Geographic exposure
Geographic exposure For personal use only Top 20 sub-regions (by AUM) 30
Slide 31: Direct portfolio detail
Direct portfolio detail For personal use only Portfolio snapshot Key metrics Total assets $3.0 bn + 33 properties with a total value of $3.0 billion located across key Australian and UK markets Customers 245 Number of properties 33 + Leasing deals remain strong across the portfolio: Occupancy 93 – 7
Slide 32: Appendix 3 Development
Rheinberg Logistics Centre , Germany For personal use only Appendix 3+ Development Bungarribee Industrial Estate, Australia
Slide 33: Developments
Developments For personal use only 1HFY16 Developments Completions Commencements Work in progress Value ($M) 1,154 1,407 3,420 Area (m sqm) 1.1 1.3 2.4 Yield (%) 9.2 8.0 8.3 Pre-committed (%) 85 71 70 Weighted Average Lease Term (years) 9.0 8.7 10.1 Development for Third Parties or Partnerships 87 6
Slide 34: Developments (cont)
Developments (cont) For personal use only Developments volume + Development pipeline from controlled land sites maintained at $10 billion + Development holdings reducing as developments transition in Partnerships + The Group’s development future cash commitments Cash commitments as at 31 December 20
Slide 35: Appendix 4 Management
For personal use only Appendix 4+ Management Senec Logistics Centre, BirminghamBusiness Slovakia Park, U.K Interlink Industrial Estate, Australia
Slide 36: Global platform
For personal use only Global platform 36
Slide 37: Goodman Australia Industrial Partnership
Goodman Australia Industrial Partnership For personal use only Key events Key metrics¹ Total assets $6.6 billion + Execution of asset rotation strategy disposing $425 Interest bearing liabilities $2.3 billion million of investment properties in the period Gearing² 34.5% + Completed 144,567 sqm of de
Slide 38: Goodman Hong Kong Logistics Partnership
Goodman Hong Kong Logistics Partnership For personal use only Key events Key metrics¹ Total assets $4.6 billion + Leased 265,531 sqm in the six months to December 2015, representing HK$213.7 million of annualised Interest bearing liabilities $0.8 billion rental income Gearing2 13.2% Customers 289 +
Slide 39: Goodman European Partnership
Goodman European Partnership For personal use only Key events Key metrics¹ + Securing over 350,000 sqm of new and renewed Total assets $3.9 billion leases (excluding developments) in the 1H 2016. Interest bearing liabilities $1.5 billion These new leases represent c. €15.2 million of annual Gearing
Slide 40: Goodman Australia Partnership
Goodman Australia Partnership For personal use only Key events Key metrics¹ Total assets $3.7 billion + Execution of asset rotation strategy disposing $215 Interest bearing liabilities $0.9 billion million of investment properties in the period Gearing² 23.9% + Completed 197,291 sqm of developments
Slide 41: Goodman China Logistics Partnership
Goodman China Logistics Partnership For personal use only Key events Key metrics¹ + GCLP portfolio continues to expand with 28 stabilised Total assets $2.6 billion properties and 22 development properties, providing Interest bearing liabilities $0.3 billion 4.2 million sqm on a fully developed basis
Slide 42: Goodman Property Trust
Goodman Property Trust For personal use only Key events Key metrics1 Total assets $2.1 billion + Distributable earnings¹ of NZ4.64 cents per unit on a Interest bearing liabilities $0.8 billion weighted average issued unit basis, compared to NZ4.53 cents per unit in the previous period Gearing3 36.1%
Slide 43: Goodman Japan Core Partnership
Goodman Japan Core Partnership For personal use only Key Events Key metrics1 Total assets $1.6 billion + Acquired a new industrial asset from the Goodman Interest bearing liabilities $0.8 billion Japan Development Partnership in July 2015 to further improve the quality of the portfolio Gearing² 41.8
Slide 44: Arlington Business Parks Partnership
Arlington Business Parks Partnership For personal use only Key Events Key metrics¹ Total assets $1.2 billion + Arlington Business Parks Partnership (ABPP) is a Interest bearing liabilities $0.4 billion core plus unlisted fund which opportunistically invests, develops and manages business parks Geari
Slide 45: Appendix 5 Capital management
For personal use only Appendix 5+ Capital management Torun Logistics Centre, Poland
Slide 46: Group financial covenants
Group financial covenants For personal use only Covenants Test Covenant Result Headroom Net liabilities1 as a percentage of net tangible assets is Gearing ratio 55.0% 24.1% 30.9% not more than 55.0% Interest cover ratio EBITDA to interest expense at least 2.0x 2.0x 5.3x 3.3x Secured debt as a percen
Slide 47: Currency mix
Currency mix For personal use only Currency mix – outstanding debt Currency mix – including the impact of Capital Hedging FX Swaps 47
Slide 48: Financial risk management
Financial risk management For personal use only Financial risk management in line with Group Board policy + Interest risk management: – Policy to ensure between 60% and 100% of current year interest rates are fixed – 87% hedged over next 12 months – Weighted average hedge maturity of 5.4 years – Wei
Slide 49: Financial risk management (cont)
Financial risk management (cont) For personal use only Interest rate Interest rate hedge profile + Interest rates are hedged to 87% over next 12 months + Weighted average hedge rate of 4.43%1 - NZD – hedge rate 4.42% - JPY – hedge rate 1.38% - HKD – hedge rate 2.06% - GBP – hedge rate 5.28%2 - Euro
Slide 50: Financial risk management (cont)
Financial risk management (cont) For personal use only Interest rate hedging profile1 Euro payable GBP payable HKD payable NZD payable JPY payable USD payable AUD receivable As at Fixed Fixed2 Fixed Fixed Fixed Fixed A$M Fixed Dec rate rate rate rate rate rate Rate €M % £M % HK$M % NZ$M % ¥M % US$M
Slide 51: Financial risk management (cont)
Financial risk management (cont) For personal use only Foreign currency denominated balance sheet hedging maturity profile Currency Maturity Weighted average Amount receivable1 Amount payable1 exchange rate NZ$ 2017 / 2018 1.2252 A$65.4m NZ$100.0m HK$ 2016 / 2018 / 2020 6.8537 A$332.5m HK$2,590.0m ¥
Slide 52: Exchange rates
Exchange rates For personal use only + Statement of Financial Position – exchange rates as at 31 December 2015 – AUDGBP – 0.4949 (31 December 2014 : 0.5240) – AUDEUR – 0.6710 (31 December 2014 : 0.6748) – AUDHKD – 5.6502 (31 December 2014 : 6.3309) – AUDBRL – 2.8884 (31 December 2014 : 2.1700) – AUD
Slide 53: Thank you
For personal use only thank+you